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TMI Blog2010 (9) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... /s.115JB at Rs.12,70,234 and tax liability of Rs.95,268 thereon. The assessee claimed deduction on account of diminution in the value of investments of Rs. 3,87,110. Further the assessee claimed deduction for interest amounting to Rs. 16,93,077. On being show caused, the assessee stated that it invested in shares of its subsidiary company, M/s Ushdev Securities Ltd. and the fall in the value of such shares was claimed as deduction. On the second item the assessee replied that it had availed term loan from IREDA in 1997 which was restructured/rescheduled in July 2001 and on that date the interest outstanding was funded by IREDA which became loan and hence it amounted to payment of interest. The AO did not approve the view p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been overturned or modified by the Hon'ble High Court. The sum and substance of the quantum proceedings is that these two additions made by the AO in the computation of total income under the regular provisions of the Act have been upheld, but the addition made to the net profit on account of diminution in the value of investments for the purposes of computation u/s 115JB finally stands deleted. 3. Before the passing of the order by the tribunal, the Assessing Officer imposed penalty u/s.271 (1)(c) by way of his order dated. 26.03.2008, in respect of disallowances made and confirmed by the ld. CIT(A) towards diminution in the value of shares and interest paid to IREDA u/s.43B with reference to the income computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above referred two additions, which were made in the original assessment as per the regular provisions of the Act, have become academic inasmuch as they have not entered in the final computation of total income made by the A.O. Neither the total income has been boosted up with such additions nor loss has scaled down. At this juncture it may be relevant to take stock of the provisions of section 271(1)(c), which provide that in case of concealment or furnishing of inaccurate particulars of income, penalty shall be levied `in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same has to be given effect in the annual accounts. The assessee claimed such deduction by making complete disclosure in this regard. The AO took a different view of the such transactions and considered them as `investments' and resultantly made the addition. Coming to the second addition on account of interest, we find that a possible view was existing allowing deduction on conversion of interest into loan, treating the same as equal to payment of interest in such year of conversion. The ld. CIT(A) has taken note of two such orders passed by the Delhi Benches of the tribunal accepting this proposition. It is an altogether different matter that the legislature inserted Explanation 3C to sec. 43B by the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid u/s.115JB(1) shall be allowed to the assessee in accordance with the provisions of this section. When the attention of the learned Departmental Representative was drawn towards the fact that sub-section (1A) has been inserted by the Finance Act, 2005 with effect from 01.04.2006 and hence would be inapplicable to the assessment year 2002-2003 under consideration, he put forth that the provisions of sub-sections (4) and (5) of section 115JAA, as relevant at the material time, would support his case as at that time also the benefit of tax credit was available. We do not find any merit in the submission advanced by the learned Departmental Representative because sub-section (4) of section 115JAA provides that : `the tax cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for tax credit u/s 115JB in new sub-section (1A). As there is no warrant for allowing tax credit paid by the assessee u/s.115JB prior to assessment year 2006-2007, the same cannot be adjusted in accordance with the provisions of sub-section (4). What sub-section (4) provides for is that the tax credit under sub-section (1) shall be allowed to be set off in a year when tax becomes payable u/s.115JA or 115JB of the Act. Thus prior to insertion of sub-section (1A) to section 115JAA, the amount of tax paid u/s.115JA(1) could be set off against the tax becoming payable on the total income computed in a subsequent year either u/s.115JA or u/s.115JB. Sub-section (5) is concerned only with the extent of tax credit allowable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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